Hacker News Reader

Comment by cube13 | Hacker News Reader

>If Zuck took Facebook public 5 years ago, they would have gotten much less money, and they would have been distracted by investors calling for them to focus on building out that business model rather than attracting users - and Zuck may have lost controlling power in the company (less money + less users = less leverage for Zuck).

Would this be a bad thing? The entire reason that Facebook needed to go public was because they needed the money to pay off their investors.

View on HN

So who's gonna pay off the public shareholders of FB now? Where's the greater fool?

Well...Facebook's IPO valuation was about 100 billion US dollars. So if Facebook generates 100 billion dollars in profits throughout its history, inflation-adjusted, IPO investors who hold onto their shares will get their money back. Otherwise, their gamble will not have paid off. There won't necessarily have to be any fools anywhere.

I'm not so sure about that. Facebook is WAY overpriced. It will take years to recoup the costs and they have very few prospects of making money in the forseeable future. I support your theory that Facebook will make 100bn back, but by the time Facebook does, the 100bn will be worth far less than that amount, due to potential earnings.

As an example, I bought Qantas shares a while ago - and held them for 10 years. Their value didn't go up much in 10 years, so the "potential" earnings of that money was not realised - so despite the shares not going backwards, I lost out.

Facebook is a losing proposition, unless they pull a rabbit out of the hat - and there's nothing on the horizon at all that even indicates they will come up with something.

That's not why FB went public. They went because they had to...

Going public wasn't required by their investor count, but they would have had to have audited financials, so the benefits of remaining private would have been reduced anyway:

http://www.quora.com/Why-does-Facebook-need-to-go-public

Facebook passed the 500 shareholder mark back in 2008 and got an exemption.

I've had no luck finding out why they then had to observe the rule by 2012 though.

Passing the 500 mark means you have to hand in SEC filings, nothing more.

No. No company "has" to go public

There needs to be some liquidity event for employees who own stock. Equity is a big part of compensation in a startup. No company "has" to go public, but they could lose a significant portion of their workforce if they don't.

Reply on news.ycombinator.com